Taiwan, which accounts for more than half of global potato production, has been facing the worst drought in 50 years in months, according to an event that experts could make more frequent due to the effects of climate change.
“There is clear pressure on the semiconductor industry,” Mark Williams, Asia’s chief economist at Capital Economics, wrote Thursday in a note referring to water scarcity and coronavirus cases, along with power outages.
Water is used to clean dozens of layers of metal that form a semiconductor.
“On a chip, there are many billions of transistors and we need a lot of metal layers to interconnect all the signals,” said Jefferey Chiu, an electrical engineer at Taiwan National University.
“We have to clean the surface over and over again after we finish each process,” Chiu said.
Taiwanese authorities have limited the supply of tap water to the entire island in response to the drought.
TSMC has already tried to address the shortage by transporting trucks to the water and increasing recycling rates. The company told CNN Business that production has so far not been affected.
“We have detailed response procedures to manage water scarcity at different stages,” he said. “Through our existing water conservation measures, we are able to manage the government’s current water use reduction requirements, without any impact on our operations.”
Super advanced chips are difficult to manufacture due to the high cost of development and the knowledge needed to manufacture them, which means that much of the production is concentrated only among a handful of suppliers.
The Taiwanese company’s state-of-the-art technology has also made it a key player as the United States and China have a bitter rivalry for the development of advanced technologies of the future, such as artificial intelligence, 5G and cloud computing.
“TSMC is key to many different companies,” said Alan Priestley, vice president analyst at Gartner. “Most of the high-performance electronics you use today, such as cell phones and tablets, all of these chips are manufactured by TSMC.”
This makes it more important to contain any threat to Taiwanese production.
“That’s why it’s urgent,” Lee said. “We hope the international community can help release vaccines as soon as possible to help control the outbreak.”
Lee’s office rejected a request for an interview with CNN Business, citing his busy schedule.
TSMC said last month that two of its employees had been diagnosed with Covid-19, although it said operations went as usual. And Chiu, the engineer at Chengchi National University, said many companies will likely be able to mitigate the risks, as the chip-making process is highly automated and manufacturers have separated employees into groups to limit the spread of the virus. .
However, at least five semiconductor manufacturers in the southwestern capital Taipei have been forced to suspend some operations as migrant workers fall ill.
King Yuan Electronics, a leading provider of semiconductor testing and packaging services, had to suspend business for two days last weekend after more than 200 staff members tested positive, according to the Central News Agency, the source of official news from the island. All migrant workers, or about 30% of the company’s 7,000 workers, were quarantined for two weeks after a virus cluster was notified in their dormitories.
Although King Yuan said he has deployed more Taiwanese workers to its production lines, he warned that factories can only operate at a limited capacity.
April data on global semiconductor orders suggest that “capacity constraints will persist,” Williams of Capital Economics wrote last month, noting that there were many more orders than Taiwan’s exports.
“This will not continue indefinitely: semiconductor orders last month were 74% higher than the pre-pandemic, which is unsustainable,” Williams said, adding that “backlog of orders” will take a little to be erased “.
Experts say the problem of water scarcity, meanwhile, could get worse in the future. According to Hsu Huang-hsiung, a climate researcher at the Sinica Academy, climate change will cause less rainfall in Taiwan in the coming decades, which could lead to more frequent droughts.
“Our projections show that the drought will become more severe in the future. Therefore, this year has provided a good opportunity to test the sustainability of our semiconductor industry,” Hsu said.
This could limit Taiwan’s advanced chip development, according to Chiu. This is because as the technology behind semiconductors becomes more sophisticated, chip makers will need more water during the chemical processes needed to make them.
Water scarcity is also not the only environmental problem at stake. Continued blackouts caused by growing demand for electricity in Taiwan have also stifled production. TSMC said even power outages affected some of its facilities.
“We need to reduce carbon dioxide emissions. But on the other hand, we need to generate more electricity,” said Hsu, who added that Taiwan’s semiconductor companies will have to invest in more renewable energy to ensure a future. sustainable.
TSMC has said it is already working to strengthen energy supply in collaboration with solar plants and wind farms across the island. Last year he said he intends to feed his production entirely through renewable energy by 2050.
– Will Ripley, Hanna Ziady, Clare Duffy and Jill Disis contributed to this report.
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